Jiri’s Notepad

Technology keiretsu provides a very good explanation what is happening at the moment in the IT industry, which I am finding quite believable.

I believe, underneath these transactions, the industry has been moving towards the way the Japanese manufacturing ecosystem is structured. GM, Ford in autos and Boeing, Airbus in aviation are similarly structured. Original Equipment Manufacturer - the OEM - with Tier 1 suppliers that supply major “systems” like nose gear assemblies, and Tier 2 and 3s which supply various parts and materials.

That is in the manufactured, product world. “Business process OEMs” like Citibank and GE and UPS are emerging and will increasingly compete with IBM and EDS and SAP to provide mortgage and health care and plant maintenance and countless other processes.

They will encourage vendor tiering as product OEMs have done. And since their business process OEM supply chain is more digital, this will hugely affect the IT/BPO industry. Major vendors (HP, Microsoft) will become Tier 1 vendors just as Delphi and Federal-Mogul are to autos. Specialist IT vendors will increasingly subcontract to them - as Tier 2 or 3 suppliers.

Geoffrey Moore’s Orchestrating the stack then further lays out details of the picture of IT industry coming under one of the phases of major restructuring.

IDC’s Three Killer Platforms add further clarity:

The IT industry is in the midst of a radical restructuring to support more dynamic enterprises. In IDC’s view, the greatest challenge for the industry in this shift to more dynamic IT lies in how to package these technologies in ways that accelerate customer adoption. In IDC’s opinion:

• Three important new killer platforms - applications, information/data, and infrastructure - are emerging as the primary adoption epicenters for dynamic IT, clustering around customers’ biggest problems with today’s “arthritic” IT.
  
• Virtually all major vendors are redefining themselves and their offerings around dynamic application, information, and infrastructure platforms. Within each of these three emerging platform areas, there are competing camps of vendors offering competing visions for what these platforms should be, which is creating a lot of potential for redistribution of market power in the coming decade.
  
• The emergence of these killer platforms raises fundamental questions about the future shape of the enterprise IT market and is forcing defining choices for virtually all IT product and services suppliers.

Frightening and exciting at the same time.